More evidence why the government should stop relying on reports paid for by vested interests - Campaign for Fairer Gambling

Posted On: 
21st March 2019

The Campaign for Fairer Gambling writes to criticise a report paid for by the bookmaking companies, who are likely to be most affected by changes to fixed odds betting terminal (FOBT) stake levels.

Credit: 
PA

The Regulatory Policy Committee (RPC) recently approved the government’s decision to reduce the maximum stake on FOBTs to £2 a spin – coming into force on 1st April – as “fit for purpose”.

 

While the RPC highlighted the limitations of IPPR and CEBR reports that were presented as evidence to government related to the social and economic cost of FOBTs, the RPC did not criticise the bookmaker-funded KPMG report, which was used to lobby government and figures from which were cited by the Chancellor despite it not being made available for public scrutiny. The RPC also state that the central assumptions of DDCMS “concerning uptake of lower stakes are informed by a report by KPMG on behalf of the Association of British Bookmakers (ABB)”.

 

But this report was widely discredited, including by ABB member Paddy Power Betfair, as reported by the Guardian. The Chancellor Philip Hammond cited the need to mitigate job losses as a key factor in Treasury’s plan at the time to delay reducing the maximum stake on FOBTs until 2020, leading to the resignation of government minister Tracey Crouch. Hammond quoted figures that had been briefed from the KPMG report when questioned by the Treasury Committee, claiming between 15,000 and 21,000 jobs would be lost if the bookmakers weren’t given time to prepare.

 

However, the KPMG admitted the report was “performed to meet specific terms of reference” and significant estimates on how customers would respond to FOBT stake reduction by substituting other gambling products, had been “agreed with the industry”, meaning agreed with the ABB. Despite KPMG’s warning, former Exchequer Secretary to the Treasury Andrew Jones called their report a “valuable contribution to the evidence base”. 

 

Paddy Power Betfair subsequently wrote to the Prime Minister to caution against the report being used, calling the assumptions “unrealistic”, as more like between 75-90% of customers would migrate to other betting shops if one closed rather than the 50% KPMG quoted. Paddy Power Betfair did not expect to see an increase in the number of loss making shops compared to the current position, and the impact would be “far less severe than the depiction provided by the ABB”.

 

Despite the RPC stating the government’s estimates were informed by the KPMG report, it told The Times in January that its analysis was not informed by their calculations, yet refused to admit where its figure on the impact of £639 million came from. The Times business section had previously reported KPMG’s calculations as fact, claiming 20,000 jobs would be “at risk” if stakes were cut on FOBTs back in February 2017, and they were echoed by William Hill CEO Philip Bowcock to the BBC in May 2018. This is despite the Financial Conduct Authority confirming to the Financial Times two months prior that they were probing allegations Ladbrokes Coral and William Hill had created a “false market” in their shares by promoting KPMG’s doomsday scenario if the government opted for a cut to £2 a spin.

 

However in November 2018 the full KPMG report was leaked to The Times and ascertained that shops still making up to £20,000 a year were somehow defined as “at risk”, which informed the claim 4,500 shops would be at risk of closure, and therefore 21,000 jobs if the government cut the stake to £2 a spin. But far fewer jobs would be at risk because nowhere near 4,500 shops – half the bookmakers’ estate – will close. What is concerning is The Treasury’s reluctance to interrogate the bookmakers’ figures, and unless it’s made a criminal offence to provide false or misleading information to Parliament – as has been previously argued – then the government should be warier of distortion by vested interests.

 

Recent estimates by the bookies about shop closures, which are still likely to be over-estimates, are GVC, which owns Ladbrokes Coral, claiming 1,000; William Hill 900; and Betfred 500, so a far lower total than 4,500. The most pernicious aspect of the ABB position was the assertion that other sectors would benefit commercially from any restrictions on FOBTs. This was the premise on which the ABB’s CEO Malcolm George had the audacity to attack Carolyn Harris MP, who chairs the APPG on FOBTs (now the APPG on Gambling Harm). The reality is, the KPMG report provided no estimate of any crossover to other sectors.